Conclusions THIS CAUSE, arising under Florida’s “Agricultural License and Bond Law” (Sections 604.15-604.34), Florida Statutes, came before the Commissioner of Agriculture of the State of Florida for consideration and final agency action. On August 26, 2009, the Petitioner, Dixie Growers, Inc., an Agent for producers of Florida agricultural products as defined by Section 604.15(10), Florida Statutes, timely filed an administrative claim pursuant to Section 604.21, Florida Statutes, to collect $176,869.20 (including the $50 claim filing fee) for strawberries they sold to Respondent, a licensed dealer in agricultural products. Respondent’s license for the time in question was supported by a surety bond required by Section 604.20, Florida Statutes, written by Lincoln General Insurance Company in the amount of $100,000. On September 2, 2009, a Notice of Filing of an Amended Claim was mailed to Respondent and Co-Respondent. The September 2, 2009 certified claim mailing to the Respondent was returned by the United States postal service on October 5, 2009 marked “UNCLAIMED”. A second certified mailing was sent by the Department to the Respondent at another address of record on October 9, 2009 and it was received by the Respondent on October 23, 2009. On November 10, 2009, the Respondent filed an ANSWER OF RESPONDENT with an attachment to the Department and requested a hearing. Accordingly, this case was referred to the Division of Administrative Hearings (“DOAH”) for a administrative hearing in accordance with the provisions of Section 120.57(1), Florida Statutes. DOAH issued a NOTICE OF HEARING on December 2, 2009 for a hearing to be held on February 25, 2010. The hearing was held with DOAH on February 25, 2010 and the Administrative Law Judge (the “ALJ”) entered her RECOMMENDED ORDER (“R.O.”) on March 24, 2010, a copy of which is attached hereto as Exhibit “A”, to which neither party filed written exceptions with this Department. Upon the consideration of the foregoing and being otherwise fully advised in the premises, it is ORDERED: The Department adopts the ALJ’s R.O. in toto including the following technical corrections to the R.O.: 1. In the caption on page one (1) of the R.O. the Respondent is shown as America Growers, Inc. and it should read American Growers, Inc. 2. On page one (1), paragraph (1) of the R.O., it states Counsel for Respondent, the witness and court reporter appeared ... . It should read Counsel for Petitioner, the witness and court reporter appeared ... . 3. On page two (2) under PRELIMINARY STATEMENT, paragraph (2), it states Petitioner filed a response on the Department’s form titled, .... It should read Respondent filed a response on the Department’s form titled ... . 4. On page three (3) under FINDINGS OF FACT, paragraph number one (1), it states; Petitioner, Dixie Growers, Inc., is a producer of agricultural products in Florida, i.e.., strawberries. It should read; Petitioner, Dixie Growers, Inc., is an Agent for the Producer(s) of agricultural products in Florida, i.e., strawberries. 5. On page five (5), paragraph eleven (11), under CONCLUSIONS OF LAW, it states; Petitioner is a “producer” of agricultural products as defined in subsection 604. 15(9), Florida Statutes. It should read; Petitioner is a “producer’s agent” for the producer(s) of agricultural products as defined in subsection 604.15(10), Florida Statutes. The ALJ’s recommendation that the Respondent, American Growers, Inc., pay Petitioner, $176,819.20 and the $50 filing fee is hereby adopted. For purposes of this Final Order consistent with the requirements of Sections 604.21(7) and (8), Florida Statutes, the ALJ’s recommendation is modified to include that payment shall be made within fifteen (15) days after this Final Order is adopted. In the event Respondent fails to pay Petitioner $176,869.20 within fifteen (15) days of the Final Order, Lincoln General Insurance Company, as Surety for Respondent, is hereby ordered to provide payment under the conditions and provisions of the Bond to CHARLES H. BRONSON, COMMISSIONER OF AGRICULTURE AND CONSUMER SERVICES, as Obligee on the Bond. The Department will notify the Surety in the event it (the Surety) is required to pay. This Order is final and effective on the date filed with the Agency Clerk of the Department. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to Section 120.68, Florida Statutes (2002) and Rule 9.110, Florida Rules of Appellate Procedure (2003). Review proceedings must be instituted by filing a petition or notice of appeal with the Agency Clerk, 5" Floor, Mayo Building, Tallahassee, FL 32399-0800. A copy of the petition for review or notice of appeal, accompanied by the filing fees prescribed by law must also be filed with the appropriate District Court of Appeal within thirty (30) days of the date this Final Order was filed with the Agency Clerk. = DONE AND ORDERED this27_ day of Frrnach , 2010. TERRY L.’RHODES Assistant Commissioner of Agriculture WA. Filed with Agency Clerk this”? _ day of Bel , 2010. Agency Clerk COPIES FURNISHED TO: Judge Carolyn S. Holifield Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Certified Receipt No. 7160 3901 9848 8028 7649) Mr. Glenn C. Thomason, Registered Agent American Growers, Inc. P. O. Box 1207 Loxahatchee, FL 33470 (Certified Receipt No. 7160 3901 9848 8028 7656) Ms. Rene Herder, Surety Bond Claims Lincoln General Insurance Company 4902 Eisenhower Blvd., Suite 155 Tampa, FL 33634 (Certified Receipt No. 7160 3901 9848 8028 7663) Mr. John Northrop, Surety Bond Claims Lincoln General Insurance Company 4902 Eisenhower Blvd., Suite 155 Tampa, FL 33634 (Certified Receipt No. 7160 3901 9848 8028 9230) Gregg E. Hutt, Attorney for Petitioner Dixie Growers, Inc. TRENAM, KEMKER, SCHARF, BARKIN, FRYE, O’NEILL & MULLIS, P.A. 101 East Kennedy Boulevard, Suite 2700 P. O. Box 1102 Tampa, FL 33601-1102 (Certified Receipt No. 7160 3901 9848 8028 9247) Ms. Linda Terry Lawton, Vice President Dixie Growers, Inc. P. O. Box 1686 Plant City, FL 33564-1686 (Certified Receipt No. 7160 3901 9848 8028 9254) Steven Hall, Attorney Florida Department of Agriculture and Consumer Services, Suite 520 Mayo Building, M-11 Tallahassee, FL 32399-0800 Mr. Mark Moritz and Mr. Brad Robson, Field Representatives
Findings Of Fact The Petitioner, Florida Department of Insurance (hereinafter referred to as Department) is the state agency authorized to regulate and enforce the provisions of Chapter 629, Florida Statutes. Nautical Management Reciprocal Insurers, Respondent, is a licensed domestic commercial reciprocal insurer, subject to the jurisdiction and regulation of the Department, pursuant to Chapter 629, Florida Statutes. The Department conducted a detailed review of Respondent's 1989 Annual Statement, and certain other information prior to issuing the Order to Show Cause. On October 17, 1985, Respondent submitted its Plan of Operations to the Department for its first three years of business in connection with its application for a certificate of authority as a domestic reciprocal insurer under Section 629.081, Florida Statutes, with the purpose of seeking its initial business in the area of ship/boat coverage and other related marine coverage, such as seafood cargo. On August 19, 1986, Respondent converted its Section 629.081 reciprocal application into a limited commercial reciprocal insurer application pursuant to Section 629.50 and reaffirmed its October 17, 1985 Plan of Operations to the Department. In Respondent's Plan of Operations, the insurer stated the objective of Respondent is "to provide a stable, reasonable (insurance) marketplace for the commercial marine members . . . . In summary, Florida should have the first insurance program in the nation whereby the commercial fishing industry can look forward to direct (member) advisory committee involvement (in Nautical Management)." Respondent is an unincorporated aggregation of subscribers operating individually and collectively through an attorney-in-fact that is organized for, and the primary activities of which consist of assuming and spreading all or any portion of the commercial property or commercial casualty exposure of its subscribers. On January 6, 1987, Respondent was granted a certificate of authority as a licensed domestic limited commercial reciprocal insurer "ocean marine" pursuant to Section 629.50(1), Florida Statutes. Respondent was authorized to transact the business of ocean marine insurance on a restricted basis for the purpose stated in its application. The application's stated purpose was to pool and spread the commercial property or casualty marine liabilities of Respondent's commercial fishing industry subscribers. Respondent's certificate of authority requires that the ocean marine insurance business written by Respondent as a domestic limited commercial reciprocal insurer shall only be for those owners/operators of commercial fishing vessels domiciled in the State of Florida that engage in commercial marine businesses. The terms "ocean marine" and "pleasure craft" are not defined by the Insurance Code or Department rules. The term "private pleasure vessel" is not synonymous with the term "commercial marine vessel." Respondent, during 1989, covered private pleasure craft in addition to commercial vessels under policies of insurance. The Respondent clearly disclosed on its annual and quarterly reports filed with the Department that it was engaged in underwriting pleasure craft. At no time did Respondent conceal or mislead the Department regarding its writing policies of insurance covering pleasure craft in addition to commercial vessels. Since on or about October 15, 1987, Respondent has made periodic inquiries of the Department regarding the capital surplus and other requirements necessary to convert its certificate of authority to that of a "full" reciprocal insurer. Additionally, Respondent has engaged in other direct correspondence with members of Petitioner's staff regarding, among other things, reinsurance, the identity of its subscribers, and has submitted certain collateral pledge agreements and debentures to determine their sufficiency as capital surplus. On May 22, 1990, the Department received the cover sheet which showed the distinction between pleasure and commercial vessels. In May, 1990, the Department determined that as of December 31, 1989, Respondent had insured a total of 1,693 vessels of various types. Of those 1,693 vessels, 1,615 or 95.4% were private pleasure vessels, and only 78 or 4.6% were commercial vessels. Based upon its 1989 gross premiums recorded in its Annual Statement, Respondent's estimated total gross written premium volume for year 1990 will be $1,381,171.32 on its 1,615 covered private pleasure vessels and only $355,717.85 on its 78 commercial vessels. Respondent has a ratio of premiums written or projected to surplus as to policyholders that exceeds 4 to 1. Respondent is in an impaired or insolvent financial condition. Although Respondent's officers and directors were not certain they would be allowed to write marine private pleasure boats under Section 629.50, Florida Statutes, they proceeded to write pleasure boat insurance prior to receiving Department approval. Respondent contends that the classification for "ocean marine insurance" means "marine insurance on anything that operates on navigable waterways". There are several lines of insurance under the ocean marine classification which differentiates between the lines of insurance for commercial vessels and pleasure craft. Respondent did not amend its Plan of Operations to indicate that it intended to insure any risks other than the commercial vessels indicated in the Plan of Operations as filed with the Department. A limited commercial reciprocal insurer must maintain a minimum surplus of at least $100,000 pursuant to Section 629.50, Florida Statutes. A general reciprocal insurer must maintain a minimum surplus of $250,000, and in addition to this, when first authorized, needs a minimum expendable surplus of $750,000 pursuant to Sections 629.071(1) and (2), Florida Statutes. At the time of its initial application, Respondent was unable to meet the financial requirements for authorization as a general reciprocal insurer and had to convert its application to that of a limited commercial reciprocal insurer. The commercial marine industry is a highly volatile industry with few insurers over whom these risk are spread. Respondent may not now meet or may not be able to meet in the future all its financial obligations toward members of the general insurance buying public it has insured and/or it has entered into business relationships with in the State of Florida. If so, these persons would suffer irreparable financial injury.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED as follows: Respondent, Nautical Management Reciprocal Insurers, be found guilty of: Using methods and practices in the conduct of its business as to render its further transaction of insurance in this state hazardous or injurious to its policyholders or the public, in violation of Section 624.418(1)(d), Florida Statutes (1989); No longer meeting the requirements for the authority originally granted, in violation of Section 624.418(2)(a), Florida Statutes (1989); and Violating a lawful order or rule of the Department or any provision of the Insurance Code, in violation of Section 624.418(2)(a), Florida Statutes. Respondent, Nautical Management Reciprocal Insurers, be found not guilty of being composed of management offices or directors which are incompetent or untrustworthy or so lacking in insurance experience, ability and standing as to jeopardize the reasonable promise of successful insurer operations. [Sections 624.404(3)(a) and 624.404(3)(b), Florida Statutes (1989)]. Respondent, Nautical Management's certificate of authority be suspended for a period of one year. The imposition of the penalty shall be abated upon compliance with the following conditions: Respondent cease and desist immediately the solicitation and underwriting of all new subscribers who are owners of pleasure craft; That policies of insurance for present subscribers who are owners of pleasure craft may only be renewed for a period not to exceed six months; and That within a reasonable time not to exceed six months, as determined by the Commission Respondent comply with all requirements necessary to convert its Certificate Authority to that of a full reciprocal, pursuant to Section 629.081, Florida Statutes (1989). Such other and additional reasonable conditions as the Commissioner may require. DONE AND ENTERED this 1st day of March, 1991, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of March, 1991. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact: Accepted in substance: Paragraphs 1,2,3,4,5,6,7,8,9,10,11,12,14,16,17,18,19,20,21,22. Rejected as not proven by clear and convincing evidence: Paragraphs 13,15. Respondent's proposed findings of fact: Accepted in substance: Paragraphs 1,2,3 (in part), 4,5,6,7 (in part), 8. Rejected as against the greater weight of the evidence: Paragraph 3 (in part). Rejected as irrelevant: Paragraphs 7 (in part), 9. COPIES FURNISHED: Michael C. Godwin, Esquire Elizabeth Gregovits, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 William E. Powers, Jr., Esquire Powers and Ferris 2544 Blairstone Pines Drive Suite A Tallahassee, FL 32301 Bill O'Neil General Counsel Department of Insurance and Treasure The Capitol, Plaza Level Tallahassee, FL 32399-0300 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. Respondent, John Roger Pascale, currently holds an insurance license issued by the Florida Department of Insurance (Petitioner), and is eligible for the issuance of further licenses. It is admitted that Respondent was a licensed general lines agent during times material to the Complaint allegations herein. Respondent, however, has voluntarily elected not to renew his license since September, 1980. By its five count Administrative Complaint dated June 13, 1980, Petitioner advised Respondent that it intended to revoke, refuse to issue or renew, or to impose lesser penalties as may be proper under the provisions of Sections 626.611 and 626.621, Florida Statutes. The main thrust of Count I is that Respondent committed the following violations: Received premiums or other funds belonging to insurers or others in transactions under his license which were trust funds received by him in a fiduciary capacity, which funds he failed to account for or pay to the insurer, insured or other persons entitled thereto in violation of Chapter 626.561(1), Florida Statutes. Lacked one or more of the qualifications for the license or permit as specified in the Insurance code in violation of Chapter 626.611(1), Florida Statutes. Willfully, under his license, circumvented the prohibitions of the insurance code. Chapter 626.611(4), Florida Statutes. Was willfully deceptive with regard to an insurance policy in violation of Section 626.611(5), Florida Statutes. Demonstrated a lack of fitness or trustworthiness to engage in the business of insurance contrary to the requirements contained in Chapter 626.611(7), Florida Statutes. Demonstrated a lack of reasonable and adequate knowledge and technical competence to engage in the transactions authorized by the license or permit. Chapter 626.611(8), Florida Statutes. Engaged in fraudulent or dishonest practices in violation of Chapter 626.611(9), Florida Statutes. Misappropriated, converted, or unlawfully withheld monies belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under his license. Chapter 626.611(10), Florida Statutes. Willfully violated an order, rule or regulation of the insurance department, or willfully violated a provision or provisions of the insurance code. Chapter 626.611(13), Florida Statutes. Withheld information from which the issuance of a license or permit could have been refused had it then existed and been known to the department contrary to the requirements of Chapter 626.621(1), Florida Statutes. Violated a provision of the insurance code contrary to Chapter 626.621(2), Florida Statutes. Violated a lawful order, rule, or regulation of the department in violation of Chapter 626.621(3), Florida Statutes. Has shown himself to be a source of injury or loss to the public or detrimental to the public interest in violation of Chapter 626.621(6), Florida Statutes. In support of the above allegations, Petitioner produced as its primary witness, Delores V. Cardet, who first purchased insurance from Respondent in November of 1977. The agent employed by Respondent with whom Ms. Cardet transacted business was Rigo Avila (Avila). (See Petitioner's Exhibit 1) Ms. Cardet's insurance application was transmitted to Lumberman's Insurance Company to effect the appropriate coverage. Her complaint against Respondent is that the wrong address was placed on her insurance application and that she was overcharged for insurance based on the premiums quoted by agent Avila. Respecting the allegation that agent Avila placed the wrong address on her insurance application, evidence indicates that when this matter was called to Respondent's attention, the matter was taken care of and Ms. Cardet subsequently received billing notices at the correct address. (Petitioner's Exhibit 3). During the time in which Ms. Cardet purchased insurance through Respondent's agency, she was employed as a manager for Beneficial Finance Company of Florida. As part of her employment duties, Ms. Cardet is involved in collections and has received management training from her employer. During the period in question Ms. Cardet had one address change. This change was properly brought to Respondent's attention and the change was effected without incident. Respondent quoted Ms. Cardet a total premium during 1978 of $699.00 whereas the insurer, Lumberman's Insurance Company, charged Ms. Cardet an annual premium of $677.00. The $22.00 overcharge represented the difference between the premium quoted by agent Avila and the actual premium charged. The excess was referred to the premium finance company (Sonny Financial Services) where it was handled as a credit toward the balance owed by Ms. Cardet. During 1979, Ms. Cardet was quoted a total annual premium of $797.00 for renewal of her insurance policy. Her policy reflects a premium of $662.00 plus two (2) motor club memberships for her two (2) vehicles at the rate of $50.00 each. The remaining difference of $35.00 was refunded from Kemper Insurance Company and forwarded to Sonny Financial Services as a credit toward the remaining balance of Ms. Cardet's premiums. 2/ Linda Manning, the underwriting service manager for Lumberman's Mutual Casualty Company, a subsidiary of the Kemper Insurance Group, acknowledged that in the insurance business, mistakes regarding insurance print-outs occur on a frequent basis. Ms. Manning services several hundred premium changes daily and testified that there are numerous reasons for an agency to give a prospective insured an improper quote. Among the reasons listed by Ms. Manning is the fact that drivers' records are not always available for a prospective insured and rate adjustments occur for various reasons. COUNT TWO The gravamen of Count Two is that Respondent's employees used an incorrect address when insurance was placed by Respondent's agency for Mr. Jeffrey Brown which resulted in the insured not getting a premium notice from the insurance company. It is also alleged that Respondent willfully listed an incorrect address for Mr. Brown in a lower rate territory which gave the insured the advantage of a lower premium. In support of the above allegations in Count Two, Petitioner introduced the testimony of Respondent's former spouse, Robin LaPlante. Ms. LaPlante's husband, Jeffrey Brown, purchased insurance through Respondent's agency on February 26, 1978. It is alleged that Respondent falsely indicated on the Brown application for automobile liability coverage with Lumberman's Mutual Casualty Company that Mr. Brown's address was in Lauderhill, Florida, whereas he actually resided in Miami, Florida. Ms. LaPlante's complaint with Respondent is that they sold a van, which was one of the two vehicles covered under the policy, and it took approximately nine (9) months before the van was deleted and a refund check was issued for termination of that coverage. Ms. LaPlante had no direct dealings with Respondent and/or his agents during the time in question. Respondent's dealings were with Ms. LaPlante's former husband, Jeffrey Brown, who did not appear to testify in these proceedings. COUNT THREE As amended by Order dated December 31, 1980, Count Three alleges that Respondent employed the services of someone other than his employees or himself to complete a portion of an insurance application; that the insured was sold membership in a motor club without his knowledge and consent and that the Respondent unlawfully endorsed a check payable to the insured from the insurance carrier to reinstate the insured's policy which had been cancelled by the insurance carrier. In support of Count Three, Petitioner presented the testimony of Stanley Friehofer. Friehofer went to Houston Motors in Dade County, Florida, for the purpose of purchasing a Subaru Brat. To do so, it was necessary for Friehofer to provide evidence of insurance on the vehicle in order to obtain financing through the dealership. Sam Houston, the salesman involved, arranged the financing on behalf of the automobile dealership. Friehofer had obtained an insurance quote from his stepmother who was also in the insurance business. After discussing the possibility of the stepmother's agency issuing a policy, Mr. Houston called Respondent, John Pascale, who was at the dealership on other matters, Respondent quoted a rate less than that quoted by Friehofer's stepmother. Friehofer paid Houston Motors $440.00 and was given an insurance binder by Sam Houston. (Petitioner's Exhibit 20). Friehofer was accompanied by his brother at Houston Motors. Also present at the time was Sam Houston. Friehofer testified that Sam Houston completed the entire insurance application and issued him the insurance binder 3/ Friehofer never received a policy for his insurance although he received a bill from Kemper Insurance Company of Orlando, Florida. (Petitioner's Exhibit 22). Friehofer noted three errors on his insurance application. Those errors were (1) his marital status (Friehofer is single), (2) the use of the vehicle was incorrectly noted, and (3) the premium quoted was the wrong amount. Friehofer also complained that he was incorrectly enrolled for membership in a motor club contrary to his consent. When Friehofer purchased the vehicle from Houston Motors, he was in the process of transferring from the Virgin Islands. Friehofer therefore used his brother's address on his insurance application. According to Friehofer, his first acquaintance with Respondent was during the taking of a deposition in this matter. Linda Manning confirmed the fact that Lumberman's Mutual charged Richard Friehofer a premium of $410.00 for insurance coverage to his vehicle. Friehofer received a cancellation notice dated April 30, 1979, from Kemper Insurance Company (Kemper) and was instructed by a Mr. Bell of Kemper to obtain "dual coverage" until Kemper could investigate the matter and refund the premiums expended by him to maintain dual coverage when the situation was resolved. Friehofer received an agency check from Respondent dated June 28, 1979. (Petitioner's Exhibit 23). Friehofer initiated the call to Kemper to advise that he intended to cancel his insurance which was effected by Respondent's agency. After Friehofer advised Kemper that he planned to cancel his coverage, he notified Respondent approximately four (4) days later. Respondent received a refund from Kemper and was unable to contact Friehofer. Respondent therefore endorsed the check and returned it to Kemper to reinstate the coverage. Respondent later learned of Friehofer's intention to, in fact, cancel the coverage and Respondent stopped payment on the check to Kemper. (See Respondent's Exhibit 1). Thereafter, Respondent refunded the premium paid from Kemper to Friehofer on June 28, 1979. (Respondent's Exhibit 13). COUNT FIVE 4/ Count Five charges Respondent with the sale of membership in a motor club to an insured and accuses the Respondent of misappropriating $38.00 of the insured's money. In support of this allegation, Petitioner introduced the deposition of Betty Monette. The thrust of this allegation is that Ms. Monette was quoted a renewal premium for her Personal Injury Protection (PIP) insurance coverage of $142.00. Thereafter, Respondent's employees determined that they could provide the same coverage through another carrier for $104.00. As a consequence, Respondent refunded the difference of $38.00 to Ms. Monette, however, the refund was accompanied by a transmittal which erroneously stated that the refund resulted from a cancellation of a motor club membership. Ms. Monette acknowledged having received the $38.00 refund, and the difference i.e. $104.00, coincides with the premium charged by Banker's Insurance for the PIP coverage. RESPONDENT'S DEFENSE Sam Houston is an official affiliated with Houston Motors. Houston contacted Respondent, who happened to be at the dealership attending to an unrelated business matter at the time the Friehofers were at the dealership to purchase a Subaru vehicle. Houston has not participated or otherwise benefited from insurance commissions derived by Respondent. Houston Motors has a policy of not being affiliated with insurance salesmen or other brokers based on legal requirements imposed upon the automobile dealerships. Houston was in charge of handling financing and insurance arrangements for purchasers of vehicles at the dealership when Stanley Friehofer purchased his vehicle from Houston Motors. Houston recalled copying basic pertinent data from a financing application onto an insurance application due to the rush that Respondent found himself in after he had quoted Friehofer a premium for coverage. Houston is not licensed to sell automobile or property insurance and is unfamiliar with the procedure of quoting premiums. When shown a copy of the insurance application executed on behalf of Friehofer, Houston recalled completing the name, address, company, telephone number, state, car information and lienholder on the insurance application. Houston was certain that he did not complete any item listed on page 2 of Petitioner's Exhibit 21 which was received in evidence herein. Houston is only licensed to sell credit life, accident and health insurance in connection with financing agreements. Houston finally recalled giving Friehofer a receipt for the $440.00 tendered for insurance premiums. Houston remembered that the Friehofer transaction was unique and to the best of his recollection, had not been previously handled by him in that fashion. Respondent, John R. Pascale, is, as stated herein, a licensed casualty, property agent who holds what is designated as a "220" license. Respondent received a bachelors degree in Business Administration from Pace University and has been involved in the insurance business since he was approximately nineteen (19) years old. Respondent started his first insurance agency in Florida during 1971, and the agency grew to five (5) offices employing approximately sixteen (16) to twenty (20) employees, presently. In response to the specific charges, Respondent had no personal dealing with Ms. Cardet on her purchase of insurance from the Pascale agency. The agent involved was Rigo Avila who was dismissed from Respondents employ on August 6, 1980. Respondent's agency files reflect that Ms. Cardet had several address changes during the three-year period in which she was insured with the assistance of Respondent's agency. Respondent countered the allegations that he incorrectly listed the wrong address for Ms. Cardet by assigning her to an area which charges lower premiums by asserting that there was no economic advantage to do this since the agency collects a commission on the amount of premiums charged. Thus, a lower premium nets the agency a lower commission. Therefore, during 1977, when Ms. Cardet was quoted a premium of $699.00, Kemper Insurance determined that the premium was approximately $677.00. A refund check was sent to Respondent which was forwarded to Segral Premium Finance Company for credit to Ms. Cardet's premium finance balance. Likewise, during 1978, Ms. Cardet was quoted a premium of $797.00 with a down payment of $300.00, with the balance financed over three (3) installments through a premium finance agency. Respondent was paid directly by the agency and the overcharge (alleged) represented a $100.00 motor club membership and a $35.00 refund which was remitted by the carrier. The refund was transferred to the premium finance agency for credit to Ms. Cardet's premium balance account. Sonny Financial Service received the $35.00 check in question. (See Respondent's Exhibits 2 and 3) Respondent acknowledged that it is an agency responsibility to correct an error once the agent learns of the error or through diligence, it is otherwise brought to the agent's attention. To correct errors, Respondent's agency usually amends the policy by means of a "declaration." Finally, Respondent acknowledged that the bookkeeping errors relative to the Cardet account had been the subject of a civil claim which was amicably settled in Ms. Cardet's behalf. (See Respondent's Exhibit 5 and 6) The insurance rates of residents in Lauderhill are generally less than the rates charged residents in Dade County. The producing agency has no control over a carrier's billing procedures. Respecting the allegations surrounding the Jeffrey Brown/Robin LaPlante matter, evidence reveals that Respondent sent policy changes per Jeffrey Brown's request to the carrier during April and September of 1978. (See Respondent's Exhibits 5 and 6) As to the allegations surrounding the Betty Monette incident, evidence revealed that Respondent was able to obtain the identical coverage through another carrier for Ms. Monette at a lower rate and thus was refunded $38.00 of a quoted $142.00 premium. The transmittal letter which accompanied the refund check, however, incorrectly stated that the $38.00 refund represented a credit for cancellation of a motor club membership. (Respondent's Exhibit 10) When all of these charges surfaced, Respondent attempted to get an understanding from his employee, Mr. Avila, who abandoned his employment with Respondent. However, Respondent did all that he could to effectively resolve the difficulties and terminated Avila's employment relationship by sending him a mailgram on August 6, 1980. (See Respondent's Exhibits 11 and 12) As to the allegations surrounding the Friehofer incident, Respondent was at Houston Motors in an effort to canvass and otherwise "drum up' additional business through the dealership. Respondent met Mr. Friehofer, quoted the insurance premium, explained the various coverages available, asked if there were questions and solicited Mr. Houston to complete the necessary basic data. Respondent acknowledged that it was not a good business practice for him to leave the insurance forms with Mr. Houston to complete, however, he considered the situation rare and unusual. He also felt that it was both an accommodation for Messrs. Houston and Friehofer. Respondent admitted that he benefited from the transaction by receiving the commission from the Friehofer insurance contract. Respondent completed the second sheet of the insurance application with the exception of the signature. (See Petitioner's Exhibit 21) Respondent did not leave any blank forms at the Houston agency or any other business enterprise. Respondent has not shared commissions received with any unlicensed or unemployed person who is not authorized to complete insurance forms. Respondent received the refund check from the Friehofer insurance application on June 20, 1979. He reviewed his file, and noted that there was no file notation regarding any intent by Mr. Friehofer to cancel his insurance coverage. He made an effort to contact Mr. Friehofer and learned that he was living with his brother-in-law in Miramar, Florida, and commuted on weekends to the Virgin Islands. He, therefore, redeposited the refund check to Kemper thinking that the policy had been erroneously cancelled. (See Petitioner's Exhibit 25 and Respondent's Exhibit 13)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, hereby, RECOMMENDED: That the Respondent be issued a letter of written reprimand cautioning him against the practice of allowing unlicensed or unauthorized persons to assist in completing forms which may be used to effect insurance coverage. In all other respects, it is RECOMMENDED that the complaint allegations filed herein be DISMISSED. RECOMMENDED this 25th day of March, 1981, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of March, 1981.
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalties should be imposed.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Respondent's Licensure and Work History Respondent is now, and has been at all times material to the instant case, licensed by Petitioner as a general lines (property and casualty) insurance agent. At no time material to the instant case has he been licensed as a surplus lines agent. In the 30 plus years that he has been in the insurance business, no licensing agency has taken any disciplinary action against him. From January of 1997 until July of 1997 (which includes the entire period during which the events described in the Administrative Complaint took place), Respondent worked as an insurance agent for Braishfield of Florida, Inc. (Braishfield), an insurance agency/brokerage firm. (In July of 1997, he started his own insurance agency/brokerage firm, Bandel and Associates, which he still operates.) The Saxony Condominium Association The Saxony Condominium Association (Association) consists of the owners of the 672 units (located in 14 buildings) in the "Saxony" section of the Kings Point condominium development in Delray Beach. The development is approximately seven to ten miles from the Atlantic Ocean. For the past six years, Elinor Lichten has been the president of the Association. The Association's Insurance Committee In August of 1992, before Ms. Lichten became president of the Association, Hurricane Andrew made landfall in the South Florida area and caused extensive property damage. In the years that followed, the premiums that the Association paid for insurance increased dramatically. In February of 1996, in an effort to contain these escalating insurance costs, the Association formed an insurance committee. Ms. Lichten named Dan Miller to serve as the chairman of the committee. Mr. Miller appointed the remaining members on the committee. Ed Greenbaum was among those Mr. Miller appointed to the committee. Ms. Lichten was not a voting member of the committee, although she did attend some (but not all) of the committee's meetings. The Association's Fireman's Fund Policies At the time the insurance committee was formed, the Association was insured by Fireman's Fund. It obtained this insurance coverage through Sedgwick James of Florida, Inc. (Sedgwick). The insurance agent who represented Sedgwick in its dealings with the Association was J. Simione. In October of 1996, the Association received a notice that the Fireman's Fund policies would not be renewed. Upon receiving the notice, Ms. Lichten telephoned Mr. Simione, who advised her that he was "negotiating to reinstate that policy and that in all probability it would be reinstated." Mr. Simione subsequently contacted Ms. Lichten and advised her that the negotiations had been successful. The Fireman's Fund policies were thereafter renewed. The renewed policies had an effective date of December 1, 1996, and an expiration date of December 1, 1997. The Association agreed to the renewal notwithstanding the renewed policies' high premiums and deductibles. Members of the insurance committee, who had met with Mr. Simione "between three to five times" prior to the renewal of the policies, had advised the committee members that there were no better options available and that they should "be absolutely delighted [to] have the coverage [they] had since insurance companies were not renewing policies." When they asked Mr. Simione to "find [a] layered program [for the Association, like those other condominium associations in the area had] where the [risk] is divided so that the premiums are reduced," Mr. Simione told them that it "wasn't possible," explaining that "all of the layering programs [they] had referred to had since fallen apart." The Insurance Committee's Discussions with Respondent Following the renewal of the Fireman's Fund policies, members of insurance committee, at the direction Mr. Miller, "start[ed] to interview" other insurance agents "to see whether or not Mr. Simione's comment to [them concerning the unavailability of a layered program for the Association] had any validity." Respondent was the second agent to be "interview[ed]." He was initially contacted by Ed Greenbaum, who told him that the insurance committee "was very upset by the current coverage package they had" and wanted to see if "there was something better." Respondent spoke subsequently with both Mr. Greenbaum and Mr. Miller. Following this conversation, he sent Mr. Greenbaum the following letter, dated February 23, 1997: It was pleasure talking to you and Dan Miller and I appreciate your candor. Based on the information you provided on the phone, it appears the premiums and deductibles that are currently in force are excessive. My comment is based on what is available in the marketplace today. It appears that the earliest I can sit down and discuss this with the board is in May. My recommendation is that we move our meeting up to March or April. This will enable us to obtain the best possible terms and conditions as we will have ample time prior to the beginning of the hurricane season. The association has nothing to lose and potentially a lot to gain. My evaluation requires a minimum amount of time. After our meeting and a review of the current program and losses, I will be in a position to confirm in writing what improvements can be made. I look forward to hearing from you. Respondent provided the "marketing person" at Braishfield with the information he had been provided by Mr. Greenbaum and Mr. Miller concerning the Association's insurance needs and loss history. The "marketing person" thereupon canvassed the market to determine if there were any alternatives to the Fireman's Fund policies. Such canvassing revealed that there did exist an alternative to the Fireman's Fund policies, in the form of a layered program in which three of the participating insurers were not "authorized insurers," as that term is used in Florida's "Surplus Lines Law." The "marketing person" prepared the following "Statement of Diligent Effort" for Respondent's signature as the "producing agent": Pursuant to [sic] Section 626.914(4), Florida Statutes, requires producing agents to document that a diligent effort has been made to place a risk with at least three (3) authorized insurers prior to contacting a surplus lines agent to export the risk in the surplus lines market. The following form, prescribed by the Department, must be completed IN FULL for each risk. Name of person contacted and telephone number are MANDATORY. COUNTY OF RISK: Palm Beach County NAME OF INSURED: Saxony A-N Condominium Association TYPE OF COVERAGE: Property AUTHORIZED INSURER #1 NAME- Hartford Insurance TELEPHONE NUMBER- 800-824-1732 PERSON CONTACTED- Ben Wilson DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- General Accident Ins. TELEPHONE NUMBER- 407-660-1985 PERSON CONTACTED- Bob Rayser DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- RISCORP TELEPHONE NUMBER- 800-226-7472 PERSON CONTACTED- Bryan Flowers DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Risk does not qualify for program Respondent signed this "Statement of Diligent Effort" on the line provided for the "[s]ignature of [p]roducing [a]gent." He did so in good faith based upon the representations made to him by the "marketing person." In April of 1997, Respondent met with members of the insurance committee and Ms. Lichten at Mr. Miller's residence to discuss the possibility of the Association obtaining, through Braishfield, the layered program of insurance described above to replace the Fireman's Fund policies that were then in effect. Respondent, on behalf of Braishfield, made a "conceptual" proposal at the meeting. After the meeting, Respondent sent the following letter, dated April 16, 1997, to Dan Miller: It was a pleasure meeting with you and the committee and again I want to apologize for arriving late. Per our discussions, we will provide our final proposal after receiving written confirmation regarding the three year loss history for property and liability. Our proposal will be effective June 1, however we will use whatever date is acceptable to the committee. We anticipate, it will take us approximately two weeks from the time we go into the marketplace until everything is finalized. It appears, there is minimal exposure for equipment, such as heating, cooling and electrical systems. Consequently, we will not include machinery and equipment breakdown in our final proposal. I strongly recommend that you obtain an updated appraisal on your buildings as it is extremely important that your replacement cost reflect today's cost. This will eliminate any potential coinsurance or under insurance problem in the event of a loss. I look forward to working with you and the committee and being appointed as your broker to assist you in all your insurance needs. In May of 1997, Respondent, on behalf of Braishfield, presented a detailed formal written proposal (Braishfield's Written Proposal) to the Association. Braishfield's Written Proposal contained an "Executive Summary" which read as follows: Executive Summary Per our conceptual proposal and correspondence of April 16, we are pleased to present our final program including terms and conditions. Our proposal is based on information provided by the Insurance Committee on policies that are currently in force. Our comparison of coverages incorporates this information. The differences are what we believe to be the key or salient features of each program. The bottom line is, we are offering a substantial premium savings, significantly lower deductibles with comparable coverage. Our recommendation is to appoint Braishfield of Florida as your broker to place all coverage in effect as soon as possible. The "final program" referenced in the "Executive Summary" was a layered program. The "[p]articipating [c]arriers" in the program and their "Best's Ratings" were listed as follows in Braishfield's Written Proposal: PARTICIPATING CARRIERS Property Insurance Carriers Best's Rating Lexington Insurance A++15 General Star Insurance A++7 Royal Surplus Lines A-7 General Liability/Crime New Hampshire Insurance A++15 Directors & Officers Liability Chubb Insurance Group A++15 Umbrella Liability Great American Insurance A+11 The three "carriers" providing "property insurance" coverage were not "authorized insurers," within the meaning of the "Surplus Lines Law." The "[b]enefits of the Braishfield [p]roposed [p]rogram [o]ver [c]urrent [p]rogram" were described in Braishfield's Written Proposal as follows: A Premium Savings of $42,529 Annually.* No Coinsurance Penalty. A 2% Deductible per building as respect to the perils of wind and hail. A $5,000,000 limit for Excess Liability A $5,000 AOP Deductible * Our premium savings is based on the following: Company Coverage Premiums Fireman's Fund Package $144,071 Fireman's Fund Umbrella $2,168 TOTAL $146,239 $ 12,966 (Agent's Fee) TOTAL $159,205 Proposal Cancellation Date June 1, 1997 Pro Rata Return Premium- $79,761 Short Rate Return Premium- $71,801 NOTE: A $1,000,000 Umbrella would produce a further savings of $3,395 Braishfield's Written Proposal also contained a "Program Comparison," which provided as follows: Coverage Current Proposed Program Program $20,454,000 Blanket As Per Limit on Schedule Real and Personal Property Coinsurance Yes No Demolition $250,000 Cost Law & $5,000,000 $500,000 Ordinance Deductible -Wind 3% of $20,454,00 2% Per Building -AOP $10,000 $5,000 Valuation Replacement Cost Re- Placement Cost Unnamed Yes See Note Storm Deductible Umbrella $1,000,00 $5,000,000 Limit NOTE: Our comparison does not include unnamed storm wind coverage. This will be discussed during the presentation. Respondent met with the committee members and Ms. Lichten for about eight hours on or about May 6, 1997. At the meeting, he explained Braishfield's Written Proposal in detail and answered questions. On or about May 9, 1997, Respondent sent the following letter to Mr. Miller for the insurance committee's consideration: The benefits to the association under Braishfield's proposal are: A $5,000 AOP deductible Significantly lower premium No co-insurance penalty A superior wind deductible in the event of a catastrophe such a hurricane. The elimination of any rate increase in 1997 even if this is a bad year for the insurance industry. Outstanding insurance service will include a renewal strategy meeting 120 days prior to expiration. This meeting will disclose options, market conditions and pricing projections. This will allow the committee to act proactively instead of reactively in the best interest of the association. -$5,000,000 Umbrella. One other point to consider involves the payment of premium. If you cancel the Fireman's Fund Package policy on June 1, the earned premium is estimated to be $72,035. If you include a short rate penalty this increases to $79,239. Including the May installment the association has paid $96,165. The difference or the return premium due the association is $24,130 which should be refunded within 60 days. Since you have paid more premium than is earned no payment should be made for June. This enables the association to apply June's payment of $12,015 toward the down payment under Braishfield's program of $26,557.16. The net amount the association has to come up with is $14,542.16. I trust this will be helpful to the committee. It has not been shown that that Respondent at any time knowingly provided the Association (through its officers and representatives) with any false or misleading information or that he knowingly, with the intent to deceive, hid any information from the Association. He disclosed, among other things, that Braishfield's proposed layered program, unlike the Fireman's Fund policies, included "unauthorized insurers" and explained the differences between "unauthorized" and "authorized" insurers. In explaining these differences, he talked about the Florida Insurance Guaranty Act, which protects those insured by "authorized insurers" in the event of insurer insolvency, but does not offer similar protection to those insured by "unauthorized insurers." Respondent also advised that the mid- term cancellation of the Fireman's Fund policies would result in a "short rate" penalty and, in addition, he discussed how Braishfield's proposed layered program would be financed and the interest rates that would be charged. The Association's Acceptance of Braishfield's Written Proposal The insurance committee brought Braishfield's Written Proposal before the Association's board of directors, which voted 15 to 14 in favor of accepting the proposal and replacing the Fireman's Fund policies with the layered program proposed by Braishfield. Post-Acceptance Activities After learning of the results of the vote, Respondent sent the following letter, dated May 27, 1997, to Mr. Miller: I was delighted to hear that the board has made their decision in favor of Braishfield. If we are looking at a May 31, 1997, effective date it is essential that the following matters be addressed immediately: The original finance agreement signed in the appropriate places indicated by "x." A check in the amount of $26,557.67 should be made payable to Braishfield of Florida for the down payment. Both the finance agreement and the check must be available to be picked up by me prior to May 31, 1997. A broker of record letter naming Braishfield on the Director's and Officer's liability policy must be executed and signed. The specific policy number should be included in the caption. A sample letter was included in our final proposal. We will be sending you a completed statement of values form which will require signature of a board or insurance committee member. I have taken the liberty of drafting a letter advising the agent to cancel all coverages effective May 31, 1997. Included is a request to confirm the return premium due the association as well as any unearned fee that will be returned. This letter should be written on Saxony letterhead and signed by you or the President of the association. In accordance with Respondent's suggestion, Ms. Lichten sent the following letter, dated May 28, 1997, to Mr. Simione: Re: Fireman's Commercial Insurance Pkg. Policy #S15MZX80662013 Fireman's Umbrella Insurance Policy #XSC 00074217738 Dear Mr. Simione: Effective May 31, 1997, please cancel above captioned policies. The Saxony Board of Directors at a Special Meeting held on May 27, 1997 voted to appoint a new agent. Please acknowledge the above cancellation in writing and also confirm the return premium due under each policy, including any penalty. Confirmation of any unearned brokerage fee should also be included. All calculations should be based on a May 31, 1997 cancellation date. Thank you for your cooperation and consideration you have given Saxony over the past few years. The following day, May 29, 1997, Ms. Lichten sent the following letter, with the described enclosures, to Respondent: Enclosed herewith please find the following: Duly signed Finance Agreement for our Insurance as agreed upon. Check #001 payable to Braishfield of Florida date May 28, 1997 drawn on Sun Trust in the amount of $26,557.67, which represents our down payment. Please send us [a] letter acknowledging receipt of the above together with [a] letter indicating that we will indeed have insurance as we agreed to commencing May 31, 1997. Looking forward to working with you. That same day, May 29, 1997, Respondent sent Ms. Lichten "copies of binders confirming coverage effective May 31, 1997 as per [Braishfield's] May 6th proposal." On June 5, 1997, Ms. Lichten sent Mr. Simione a signed (by Ms. Lichten) and dated (May 29, 1997) "Cancellation Request/Policy Release" form formally requesting cancellation of the Fireman's Fund policies, effective May 31, 1997. On or about June 20, 1997, Ms. Lichten was sent a Certificate of Insurance "certify[ing] that the policies listed [which had been described in Braishfield's Written Proposal] ha[d] been issued to the [Association] for the policy period indicated [May 31, 1997, to May 31, 1998]." On or about June 30, 1997, the appraiser that the Association had hired (Allied Appraisal Service) completed the "updated appraisal on [the Association's] buildings" that Respondent had recommended. Respondent reviewed the appraisal report and prepared a written analysis of the report, which he subsequently discussed with the members of the insurance committee and Ms. Lichten. In his written analysis, Respondent stated, among other things, the following: This proposal analyzes the appraisal made by Allied Appraisal Service on June 30, covering the building and surrounding improvements at Saxony "E," Delray Beach, Florida 33446. The purpose is two fold. To ascertain if the values being reported to the insurance companies reflect as closely as possible the exposure at risk. This includes the impact on coverages such as limits and deductibles. The other area is the premium which includes various options. The property coverage is underwritten in a layered program using three companies. The total limit of coverage is $20,454,000, which is subject to a sublimit per building of $1,461,000. Based on the updated appraisal, the 100% replacement cost on buildings and improvements is $24,561,978 which breaks down to $1,754,427 per building. These amounts were arrived at by eliminating and or reducing those items that were not the responsibility of the association. Other adjustments were made regarding contingencies and contractor's profit which should be discussed. The breakdown is provided on Exhibit I attached. The difference or the amount of increase required to comply with the appraisal is $4,107,978. The change in values increases the wind deductible from $29,220 to $35,088 per building. On or about July 18, 1997, Respondent (who, by this time, had left the employ of Braishfield and had started his own insurance agency/brokerage firm) sent Ms. Lichten a letter, which read as follows: Per our meeting with the insurance committee on Wednesday, July 16, it was recommended the building values be amended based on the property appraisal made by Allied Appraisal Service[] on June 30, 1997. The 100% replacement value including improvements is $24,561,978. The total amount of insurance in force is $20,454,000. The net result is a[n] increase of $4,107,978. Also included in the appraisal is the cost to change certain items revised by current building codes. This is known as law or ordinance coverage. We recommend an increase in the limit by $850,000 to $1,350,000 to cover the additional exposure. Both of the above increases place the property insurance in compliance with the appraisal. The underwriter has agreed to provide blanket coverage using 90% coinsurance. The blanket amount excluding law or ordinance coverage is $22,105,760. This is an improvement over the existing program as the blanket amount would apply to any one loss and the basis for determining the premium would be significantly less. Using an effective date of July 31, the additional premium including taxes and fees is $8,446.20. In addition to the improvement in coverage and key deductibles, our program provides a net savings in excess of $34,000 a year over the Fireman's Fund policy. The changes that Respondent had recommended based upon the "updated Appraisal" were "bound," as Respondent advised Ms. Lichten by the following letter dated August 12, 1997: This will confirm that effective July 31, the following changes have been bound: The total insurable value increased to $22,105,780. The Law or Ordinance coverage increased to $1,350,000. Coverage is on a blanket basis. The coinsurance clause has been amended to 90%. The 2% wind deductible per building is increased to $31,580. All of these changes were based on the property appraisal made by Allied Appraisal Service on June 30, with some exceptions, such as Misc. & Contingencies and Overhead/Profits. It was agreed by the insurance committee not to include these items. Attached is our invoice amount of $8,446.20 representing the additional premium due hereunder. Please make your check payable to Braishfield of Florida and send it to me. In October of 1997, Respondent submitted a renewal proposal to the Association. The proposal was accepted and renewed coverage was bound, effective December 1, 1997, for a period of three years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order dismissing the Administrative Complaint issued against Respondent. DONE AND ENTERED this 7th day of July, 2000, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 2000.
The Issue The issue for consideration in this hearing is whether the Respondent's licenses as an insurance agent in Florida should be disciplined because of the matters set forth in the Administrative Complaint filed in this case.
Findings Of Fact At all times pertinent to the allegations contained herein, the Department of Insurance was the state agency in Florida responsible for the licensing of insurance professionals and the regulation of the insurance industry in this state. Respondent, Harold R. Leiffer, was licensed by the state as a life and health (debit) agent, a life agent, a life and health agent, a general lines agent, and a public adjuster (for fire and allied lines, including marine casualty and motor vehicle damage and mechanical breakdown insurance), and was engaged in the practice of the insurance profession under those licenses in Florida. In January, 1991, Donna L. Devor, at the time, the owner of Cobra Construction Co., a corporation, was contacted by the Respondent after she received a bid for the construction of a fire station in Florida. Ms. Devor had previously known the Respondent as an insurance agent through a company she was associated with to which he had provided construction bonds in the past. On this occasion, in January, 1991, according to Ms. Devor, Respondent called to say he was with a new company and could get her the bond she needed to support the bid she had been awarded. Ms. Devor invited him over to talk about it and they discussed it. Again, he indicated he would be able to get her the bond she needed. The next day, when he came back with the preliminary paperwork, he asked for a check in the amount of $850.00. According to Ms. Devor, he indicated that of that sum, $500.00 was to cover setup fees and other fees by the bonding company and $300.00 was to go to DSI, his agency. In response, Ms. Devor gave him a check for $850.00 made payable, at his request, to ICI, Respondent's other company, after which he left with the forms she had signed, some in blank. When he left, he promised to process the paperwork immediately in response to her stressing the urgency of the need for the bond. After several days passed with no response, Ms. Devor attempted to contact Respondent by phone but was unable to reach him. When she finally was able to speak with him, he asked her to come to his office to discuss the bonding company's requirement that she place her house as collateral for the bond. Ms. Devor immediately declined to do this but nonetheless went to his office at DSI to talk with him. When she arrived, he immediately called the bonding company which again requested she place her house as security, and she again refused. When this happened, Respondent asked her to come back the next day as he would try another source for the bond. When she contacted him the following day, he indicated he could get the bond from an Atlanta firm but she would have to go there to pick it up. She agreed to do this and Respondent, in addition, asked for a financial statement which she arranged to have provided. Ms. Devor flew to Atlanta and was met there by Respondent who drove her to the bonding company's office. When she met with company officials, she was told they imposed a coinsurance requirement of $100,000.00 in the company's name be put up by her and she did not have this cash available. Respondent, she claims, knew this. Nonetheless, she was furnished an office and a telephone to try to get the money but was unable to do so and as a result, the bonding company declined to issue the bond. After that failure, she returned to Orlando and, realizing that Respondent was apparently unable to help her, started to look for another bonding company. She called Respondent's secretary several times attempting to reach him to get her money back but, when she was unable to do so, finally sent him a letter requesting the return of her $850.00 payment. Respondent failed to respond to that letter and she continued to try to reach him, unsuccessfully, by phone. Finally, she was able to contact DSI's owner who indicated she had never heard of Ms. Devor and asked she be shown proof that the bond premium was paid. When Ms. Devor sent a copy of the check she had given to Respondent, the owner evidenced some dissatisfaction with Respondent but failed to refund the money. Ms. Devor continued to try to reach Respondent by phone without success. When she found where he lived, she wrote him another letter asking not only for the return of the amount she had paid him but also for reimbursement of expenses she had incurred in flying to Atlanta. She received neither. However, about a week or so later, she received a call from Respondent on her answering machine which left no return number. She was thereafter unable to again contact Respondent nor did she ever receive reimbursement of her payment to him. The $850.00 check was endorsed by Respondent with his own name and deposited to his personal account, Number 1307004115, at the Orange Bank in Winter Park, Florida. According to Mr. Leach, Vice-President of security operations for Pinnacle Insurance in Carrolton, Georgia, the company to which Ms. Devor flew at Respondent's request, the company file for Cobra Corporation shows no bond was ever issued to that company. Florida does not allow a charge for setup fees in any case, and he would not have received one in connection with this application even if the bond had been issued. It is company policy not to charge a fee of any kind if a bond is not issued. Only if the application is approved and the applicant then withdraws is a fee charged. In any case, the premium on a $100,000.00 bond such as that sought here would be $2,500.00. Respondent at one point owned Statewide Insurance and sold it to DSI, the company with whom he was associated at the time he took the bond application from Ms. Devor. His story of the transaction differs somewhat from that of Ms. Devor, however, in that he denies calling her to solicit her business. Instead, he claims, she called him and begged that he get her the bond she needed for this contract. In fact, he claims, she said she'd do anything she had to do, or pay any fee necessary, to get the bond. When he explained what the fees would be, she agreed to them. Respondent contends he got the bond through United American Security in Boston, which charges a setup fee of $500.00. When Ms. Devor, however, could not live with the company's conditions, indicating she could not get the required additional credit from her bank, she rejected that condition and Respondent agreed to try with Pinnacle. It is, he claims, Ms. Devor, who suggested they go to Atlanta where Mr. Mathieson, the representative of the insurance company at the time, imposed the requirement for collateral. He also contends she agreed to this. Afterwards, he asserts, Ms. Devor claimed to have gotten a bond without collateral from a company in Ft. Lauderdale which she presented to the contracting party. From the check for $850.00 which Respondent received from Ms. Devor, he paid $500.00 to United American as its setup fee, and $250.00 to Pinnacle for its fees. Respondent did not provide a cancelled check as evidence of either payment, however. He cannot account for the additional $100.00. In any case, he contends, after Ms. Devor requested a refund, he contacted both United American and Pinnacle to request reimbursement, but both refused because, they claimed, they had accepted her and had done credit checks on her. Respondent claims that Ms. Devor was offered two bonds, both of which she rejected because she did not want to put up the collateral or security requested by the bonding companies. He went to the companies under those conditions because, he contends, she had previously stated she would accept conditions, implying she would do anything necessary to get the bonds. In support of Mr. Leiffer's assertions, he introduced an enrollment form with United American Contractor's Association signed by Ms. Devor which indicates Cobra Construction Corp. applied for enrollment in the association and submitted a check for $500.00 as an enrollment fee. He also introduced a contractor's questionnaire reflecting the payment of a $250.00 application setup fee with Pinnacle to cover underwriting reviews and efforts in establishing a bond account. Ms. Devor, however, while admitting her signature appears thereon, does not recall having signed either document, contending that they may have been among those documents Respondent asked her to sign at the beginning of their relationship regarding this bond, some of which she signed in blank. Respondent, who had previously been with DSI and had just recently gone with ICI, nonetheless could give no reasonable justification for placing the $850.00 fee paid to him by Ms. Devor in his personal bank account and not in the account of one of the two companies.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Administrative Complaint in this case, alleging misconduct by Respondent, Harold Rush Leiffer, be dismissed. RECOMMENDED this 10th day of December, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1992. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: - 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. Accepted and incorporated herein. First sentence not a FOF. Second sentence accepted but evidence was presented by Respondent to show that Respondent signed an application for membership in UACA ($500.00) and with some other unspecified concern for 1 $250.00 setup fee. Balance of paragraph accepted. Rejected as unproven by clear and convincing evidence. FOR THE RESPONDENT: No Proposed Findings of Fact submitted. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Harold R. Leiffer 2026 St. George Avenue Winter Park, Florida 32789 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issues in this case are whether Respondent, Henry Symeon Demayo, committed the offenses alleged in an Administrative Complaint, as amended, issued by Petitioner, the Department of Financial Services and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. Respondent Henry Symeon Demayo is currently and was at the times relevant, licensed in Florida as a surplus lines agent (01-20), general lines agent (02-20), life and health agent (02- 18), and health agent (02-40). Mr. Demayo’s license number is A065749. At all relevant times, Mr. Demayo is and was at the times relevant, “self-appointed” as to his surplus lines license. Mr. Demayo was the president of Brokerage Insurance Group Corp., a insurance agency licensed since December 13, 2006. Florida Surplus Lines Office Reviews On February 3, 2003, the Florida Surplus Lines Service Office (hereinafter referred to as the “FSLSO”), through its agent, Thomas Abel, conducted a “no business review” of Mr. Demayo’s surplus lines business. Mr. Abel requested and received a total of 50 business files from Mr. Demayo, which he reviewed. As a part of his review, Mr. Abel scanned a number of documents from the files provided to him by Mr. Demayo (pages 19 through 42 of Petitioner’s Exhibit 2). Mr. Abel also prepared a spread-sheet, pages 16 and 17 of Petitioner’s Exhibit 2, summarizing his findings, and an FSLSO Compliance Review Summary (pages 14 and 15 of Petitioner’s Exhibit 2). On April 15, 2003, Mr. Abel returned to Mr. Demayo’s business to conduct a “secondary review.” Again, Mr. Abel scanned documents from Mr. Demayo’s files (pages 49 through 63 of Petitioner’s Exhibit 2), prepared a spread-sheet (page 48 of Petitioner’s Exhibit 2), and an FSLSO Compliance Review Summary (pages 43 through 47 of Petitioner’s Exhibit 2). As a result of Mr. Abel’s findings, the Department issued the Administrative Complaint at issue in this case. At some point during the reviews, Mr. Abel suggested to Mr. Demayo that he had failed to properly report insurance transactions which are the subject of some of the charges in the Administrative Complaint. While not compelled to do so, Mr. Demayo followed Mr. Abel’s advice and reported most, if not all, those transactions to FSLSO, beginning in 2003. Mr. Demayo also paid surplus lines tax, discussed, infra, on some of the late reported insurance transactions. Count I; Failure to Remit Surplus Lines Tax. Section 626.932, Florida Statutes, requires that surplus lines agents collect a tax equal to five percent of the gross premium of all insurance premiums charged for the sale of surplus lines insurance (hereinafter referred to as the “Tax”) which has a Florida connection. The Tax is required to be remitted by surplus lines agents to the FSLSO. Surplus lines insurance on risks or exposures with no connection with the State of Florida are not subject to the Tax. As relevant to this matter, surplus lines insurance on, or with respect to, vessels, cargo, or aircraft written under Section 626.917, Florida Statutes (essentially commercial marine and aircraft surplus lines), is exempt from the Tax. The Department alleged in Count I of the Administrative Compliant that Mr. Demayo sold three separate surplus lines insurance policies for which Tax was due that he failed to remit. In its Proposed Recommended Order, the Department has conceded that Mr. Demayo was not liable for Tax on two of those policies, leaving only one policy at issue. The policy which remains at issue is a policy sold to Steiner Day Spa Group (hereinafter referred to as “Steiner”), policy number 6476583, covering the period 10/31/2001 to 10/31/2002 (hereinafter referred to as the “Steiner Spa Policy”). Based upon documents provided to Mr. Abel by Mr. Demayo, the Steiner Spa Policy was placed with Lexington Insurance Company, a surplus lines insurer. In a “FAX SHEET” dated October 29, 2001, also provided by Mr. Demayo to Mr. Abel, which was sent from Brokerage Insurance Group to “Southeastern Risk Specialists,” the following is stated concerning payment for the Steiner Spa Policy: I will bill $54,322.42, distributed as follows: $51,555. Premium 35. Fee. 2,577.75 Tax 154.67 Service Fee We are to handle the filings Based upon another document provided by Mr. Demayo to Mr. Able (page 23 of Petitioner’s Exhibit 2), Steiner Spa (formerly The Greenhouse Spa), had a location at the Portofino Bay Hotel, Orlando, Florida, which the Department argues gives the policy a Florida connection. Contrary to his representation in the “FAX SHEET,” Mr. Demayo did not remit any Tax to FSLSO for the Steiner Spa Policy. According to Mr. Demayo, Steiner had purchased The Greenhouse Spa, including the Orlando location, prior to issuance of the Steiner Spa Policy. The Orlando location was, according to Mr. Demayo, closed before the policy took effect and, therefore, there was not risk insured in Florida. Mr. Demayo did not explain, however, why the list of spa locations included with the Lexington Insurance Company policy included the Orlando location, why there is no mention in any of the documentation concerning the Steiner Spa Policy of the closing of the Orlando location, or, most importantly, why his office informed Southeastern Risk Specialists that Brokerage Insurance Group would be billing $2,577.75 of Tax for the Steiner Spa Policy. His testimony, summarized in paragraph 18, is therefore rejected as unconvincing. Based upon the foregoing, it is found that Mr. Demayo should have paid Tax for the Steiner Spa Policy. Count III; Failure to File Quarterly Reports. Section 626.931(1), Florida Statutes, requires that surplus lines agents file with the FSLSO a quarterly affidavit, “on forms as prescribed and furnished by the Florida Surplus Lines Service Office, stating that all surplus lines insurance transacted by him or her during such calendar quarter has been submitted to the Florida Surplus Lines Service Office as required.” As of May 7, 2003, Mr. Demayo had failed to file a quarterly report/affidavit with the FSLSO for the following periods: October 1999 through December 1999; January 2000 through March 2000; October 2000 through December 2000; January 2001 through March 2001; July 2001 through September 2001; April 2002 through June 2002; and July 2002 through September 2002; 23 Mr. Demayo also failed to timely file a quarterly report/affidavit with FSLSO for the following periods: April through June 2007; July through September 2007; October through December 2007; and January through March 2008. Count IV; Filing False Quarterly Reports and Failing to Remit the Tax. In the Administrative Complaint, the Department alleges that Mr. Demayo filed false quarterly reports for nine different quarters. For some of those reports, the Department also alleged that Mr. Demayo failed to remit Tax. The Department alleged specifically which policies were falsely reported and for which policies, no Tax was remitted (hereinafter collectively referred to as the “Disputed Policies”). In its Proposed Recommended Order, the Department has addressed fewer quarterly reports and policies than alleged in the Administrative Complaint. To the extent that reports or policies included in the Administrative Complaint were not addressed in the Proposed Recommended Order, those allegations were not proved. April 1999 through June 1999 Quarter. Mr. Demayo signed a Quarterly Report Affidavit and Tax Return (page 78 of Petitioner’s Exhibit 2)(hereinafter referred to as the “Quarterly Report”), for the April 1, 1999, through June 30, 1999, quarter, representing that “no surplus lines business was transacted during the calendar quarter.” Consequently, no Tax was paid. On March 11, 2003, Mr. Demayo reported to the FSLSO that he had written a surplus lines policy, which was placed with Lloyd’s Underwriters at London (hereinafter referred to as “Lloyd’s”), for Greater Atlantic Holdings, policy number C35087/99, effective April 8, 1999 (hereinafter referred to as the “Greater Atlantic Policy”). The only evidence as to whether Tax was due on the Greater Atlantic Policy came from Mr. Demayo, who testified that Greater Atlantic Holdings was a Bahamian company and that all the risks for the policy, since it was placed with Lloyd’s, was located outside Florida. This testimony is credited and, therefore, the transaction was not reportable and no Tax was due. July 1999 through September 1999. Mr. Demayo signed the Quarterly Report (page 79 of Petitioner’s Exhibit 2), for the July 1, 1999, through September 30, 1999, quarter, representing that “no surplus lines business was transacted during the calendar quarter.” Consequently, no Tax was paid. On March 21, 2003, Mr. Demayo reported to the FSLSO that he had written a surplus lines policy, which was placed with Markel International Insurance Company Limited, for Trans- Photo, policy number TE9900, effective August 5, 1999 (hereinafter referred to as the “Tans-Photo Policy”). The Department has correctly pointed out that Mr. Demayo’s testimony concerning Markel International Insurance Company Limited and other companies with the name “Markel” in them was confusing, at best. Mr. Demayo testified clearly and convincingly, however, that the policy had no connection with Florida and was, therefore, neither a reportable policy or one subject to Tax. The only evidence concerning the nature of the Trans-Photo Policy, provided by Mr. Demayo, was that the policy was for marine cargo with no Florida exposure purchased. April 2000 through June 2000. Mr. Demayo signed the Quarterly Report (page 81 of Petitioner’s Exhibit 2), for the April 1, 2000, through June 30, 2000, quarter, representing that “no surplus lines business was transacted during the calendar quarter.” No Tax was paid. On February 28, 2003, Mr. Demayo reported to the FSLSO that he had written a renewal surplus lines policy for Image, which was placed with Lloyd’s, policy number C00564/00, effective April 7, 2000 (hereinafter referred to as the “Images Policy”). The same date, Mr. Demayo reported to the FSLSO that he had written a surplus lines policy for Greater Atlantic Holdings, which was placed with American International Specialty Lines Insurance, policy number EX54300046, effective April 14, 2000 (hereinafter referred to as the “Greater Atlantic Renewal Policy”). Tax on this renewal policy was paid by Mr. Demayo on or about April 30, 2003. Finally, Mr. Demayo received additional premium for a Greater Atlantic Holdings policy, policy number C35087/99, placed with Lloyd’s. Additional premium was received twice, one amount effective April 8, 2000, and the other effective April 11, 2000 (hereinafter referred to as “GAH Additional Premium”). These transactions were not reported until March 6, 2003, and March 11, 2003, respectively. Image is a photo concessionaire which places photo imaging equipment on ships, which is used outside of Florida. The evidence failed to prove that the coverage for the Image Policy had any connection with Florida. e. The only evidence as to whether Tax was due on the Greater Atlantic Policy came from Mr. Demayo, who testified that Greater Atlantic Holdings was a Bahamian company and that all the risks for the policy, since it was placed with Lloyds, was located outside Florida. This testimony is credited. Therefore the Greater Atlantic Renewal Policy and the GAH Additional Premium transactions were not subject to Tax or reporting. July 2000 through September 2000. Mr. Demayo signed the Quarterly Report (page 80 of Petitioner’s Exhibit 2), for the July 1, 2000, through September 30, 2000, quarter, representing that “no surplus lines business was transacted during the calendar quarter” and that zero Tax was paid. On March 11, 2003, Mr. Demayo reported to the FSLSO that he had received additional premium for a Greater Atlantic Holdings policy, placed with Lloyd’s, policy number C35087/99, effective August 18, 2000 (hereinafter referred to as the “Third GAH Additional Premium”). The only evidence as to whether Tax was due on the Third GAH Premium came from Mr. Demayo, who testified that Greater Altantic Holdings was a Bahamian company and that all the risks for the policy for which the additional premium was paid, since it was placed with Lloyds, was located outside Florida. This testimony is credited. Therefore the Third GAH Additional Premium transaction was not subject to Tax or reporting. April 2001 through June 2001. Mr. Demayo signed the Quarterly Report (page 83 of Petitioner’s Exhibit 2), for the April 1, 2001, through June 30, 2001, quarter, representing that “no surplus lines business was transacted during the calendar quarter” and that zero Tax was paid. On February 28, 2003, Mr. Demayo reported to the FSLSO that he had placed a renewal policy for Image, placed with Lloyd’s, policy number C00564/01, effective May 11, 2001 (hereinafter referred to as the “Image Renewal Policy”). The only evidence as to whether Tax was due on the Image Renewal Policy came from Mr. Demayo, who testified that the Image Renewal Policy was a marine policy with no Florida exposure. This testimony is credited. Therefore the Image Renewal Policy was not subject to Tax or reporting. October 2001 through December 2001. Mr. Demayo signed the Quarterly Report (page 84 of Petitioner’s Exhibit 2), for the October 1, 2001, through December 31, 2001, quarter, representing that “no surplus lines business was transacted during the calendar quarter” and that zero Tax was paid. On February 6, 2003, Mr. Demayo reported to the FSLSO that he had placed a new business policy for Maritime Telecommunication, placed with Lloyd’s, policy number C00606/01, effective November 9, 2001 (hereinafter referred to as the “Maritime Policy”). On the same date, Mr. Demayo also reported that he had placed a renewal policy for Image Photo Services, Inc., with American International Specialty Lines Insurance Company, policy number EX54300010, effective November 30, 2001 (hereinafter referred to as the “IPS Renewal Policy”). Tax on the IPS Renewal Policy was paid on or about April 30, 2003. Finally, Mr. Demayo also reported that he had placed a renewal policy for Ocean Images with Lloyd’s, policy number 51/2001LP, effective October 19, 2001 (hereinafter referred to as the “Ocean Renewal Policy”). The only evidence as to whether Tax was due on the Image Renewal Policy or the Ocean Renewal Policy came from Mr. Demayo, who testified that both were marine policies with no Florida exposure. This testimony is credited. Therefore the Image Renewal Policy and the Ocean Renewal Policy were not subject to Tax or reporting. January 2003 through March 2003. Mr. Demayo signed the Quarterly Report (page 86 of Petitioner’s Exhibit 2), for the January 1, 2003, through March 31, 2003, quarter, representing that “no surplus lines business was transacted during the calendar quarter” and that zero Tax was paid. On March 18, 2003, Mr. Demayo reported to the FSLSO that he had placed a renewal policy for Image, placed with Lloyd’s, policy number C7027/00, effective February 20, 2003 (hereinafter referred to as the “2003 Image Renewal Policy”). The only evidence as to whether Tax was due on the 2003 Image Renewal Policy came from Mr. Demayo, who testified that the 2003 Image Renewal Policy was a marine policy with no Florida exposure. This testimony is credited. Therefore the 2003 Image Renewal Policy was not subject to Tax or reporting. The evidence presented by the Department in support of the allegations of Count IV was circumstantial and indirect. The Department has suggested that the following proposed facts support its position with regard to the April 1999 through June 1999 Quarterly Report, paragraph 35 of the Department’s Proposed Recommended Order: Respondent filed the policy with FSLSO [Dept. Ex. No. 2 at 73] Respondent did not backout the policy from the FSLSO system. [Dept. Ex. No. 13]. If the policy should never have been filed with FSLSO, as Respondent now asserts, then Respondent would have backed out the policy from the FSLSO system. Southpoint Pharmacy, 596 So.2d at 109 (an ALJ may make reasonable inferences). After all, Respondent has backed out dozens of other policies and additional premium transactions that he filed with FSLSO, [Depart. Ex. No. 13], including the contemporaneously filed policies identified in Paragraphs 19a, 19d, and 19e of the Amended Complaint. [Dept. Ex. No. 2 at 73, 74]; [Dept. Ex. No. 2 at 73 (Respondent entered new business for Greater Atlantic Holdings (policy number 361261011999) on 3/19/2003 with FSLSO and backed out of that transaction the very following day (the Department incorrectly charged the Respondent with the backout in ¶ 19b of the Amended Complaint)]; [Dept. Ex. No. 13 at First Quarter 2007 at page 3]. And Respondent has had nearly six years to back out this policy. [Dept. Ex. No. 2 at 73 (policy filed with FSLSO on 3/19/2003)]. Yet, Respondent hasn’t done so. [Dept. Ex. No. 13]. Additionally, Respondent claims that Matt Webster and Lisa French, employees of FSLSO, assisted him in backing out policies that he filed in error, such as policies that had no Florida risk. [Tr. At 168, 238-239]. If Matt Webster and Lisa French assisted Respondent, there is a good reason why this policy was not backed out of the FSLSO system; the policy was required to be filed with FSLSO. Southpointe Pharmacy, 596 So.2d at 109 (an ALJ may make reasonable inferences). The Department has suggested essentially the same proposed facts support its position with regard to all of the Quarterly Reports at issue in Count IV. The Department’s argument that the suggested inferences support the allegations of the Administrative Complaint, is rejected. Mr. Demayo explained why he reported the Disputed Policies: Mr. Able suggested that he do so, and Mr. Demayo, concerned about the consequences of not reporting them, followed Mr. Abel’s advice. Mr. Demayo’s explanation for why the Disputed Policies were reported to FSLSO was a reasonable one and, given the lack of evidence to the contrary, has been credited. Therefore, no inference can reasonably be drawn from the fact that Mr. Demayo reported the Disputed Policies to FSLSO. Without this suggested inference, little is left to support the Department’s allegations. Ultimately, while Mr. Demayo’s testimony was often self-serving and somewhat misleading, it was not his burden to prove the true nature of the coverage of the Disputed Policies. It was the Department that was required to prove, clearly and convincingly, that the coverage of the Disputed Policies had a connection with Florida. Virtually no such proof was presented by the Department, while Mr. Demayo testified that none of the policies had any connection with Florida. Mr. Demayo offered an explanation of the nature of the coverage of each of the Disputed Policies while the Department offered essentially no direct evidence. The Department failed to prove that the Disputed Policies had any connection with the State of Florida and, therefore, Mr. Demayo was not required to report them in a Quarterly Report or make payment of any Tax on them.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Henry Symeon Demayo violated the provisions of Chapter 626, Florida Statutes, described, supra; dismissing all other charges; suspending his licenses for a period of three months; and requiring that he pay an administrative fine of $2,500.00. DONE AND ENTERED this 19th day of August, 2009, in Tallahassee, Leon County, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings This 19th day of August, 2009. COPIES FURNISHED: Robert Alan Fox, Senior Attorney Division of Legal Services Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Sophie Demayo, Esquire 9100 Southwest 115th Terrace Miami, Florida 33176 Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
The Issue The issue for determination is whether Respondent committed the offenses set forth in the administrative complaint, and, if so, what action should be taken.
Findings Of Fact At all times material hereto, Peter Gregory Santisteban (Respondent) was licensed as a general lines agent by the State of Florida. At all times material hereto, Southern Associates Insurance Agency (Southern Associates) was a licensed general lines insurance agency by the State of Florida. Southern Associates was incorporated. At all times material hereto, Respondent was the owner, sole stockholder, president, and corporate director of Southern Associates. At all times material hereto, Respondent had sole responsibility for the financial affairs of Southern Associates and had sole signatory authority on Southern Associates’ checking account. AAPCO is a premium finance company. At all times material hereto, Respondent and AAPCO had an arrangement in which policies written by Respondent, which needed financing, would be financed by AAPCO. The arrangement between Respondent and AAPCO was executed as follows: Respondent maintained AAPCO drafts and had signatory authority on APPCO drafts. If a client needed financing, Respondent would receive a down payment from the client on the insurance premium. The down payment was approximately thirty-three percent of the premium. Respondent would receive a commission of approximately fifteen percent. His commission would be taken from the down payment. Respondent would execute an APPCO draft payable to the insurance company for the total premium less his commission. Respondent would forward the down payment less his commission (net) to AAPCO, the premium finance company. In or around 1990 or 1991, the execution of the arrangement changed in that, instead of writing a check to AAPCO for each insured’s net, Respondent would use transmittal forms which permitted Respondent to write one check for the net of multiple insureds. On or about March 25, 1994, Respondent issued check number 1503 from the account of Southern Associates payable to AAPCO in the amount of $1,215.14 for payment of multiple nets due to AAPCO. The check was deposited in the account of AAPCO but was returned for insufficient funds. On or about May 26, 1994, Respondent issued check number 1517 from the account of Southern Associates payable to AAPCO in the amount of $2,706.73 for payment of multiple nets due to AAPCO. The check was deposited in the account of AAPCO but was returned due to the account being closed. On or about July 13, 1994, AAPCO made demand for Respondent to pay the moneys due it. Respondent did not and has not paid AAPCO the moneys due. The total amount owed by Respondent to AAPCO is $3,921.87. Respondent attempted to reach an agreement with AAPCO wherein he would make monthly payments until the moneys due had been paid in full. AAPCO rejected Respondent’s offer and instead requested that Respondent make a lump sum payment of $2,000 and pay the remainder in monthly installments. Due to financial difficulty, Respondent was unable to agree to AAPCO’s payment option.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order Suspending the license of Peter Gregory Santisteban, as a general lines agent, for nine months; and Conditioning the reinstatement of his license after the expiration of the suspension upon his payment of $3,921.87 to AAPCO. DONE AND ENTERED this 28th day of February, 1997, in Tallahassee, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1997. COPIES FURNISHED: Bob Prentiss, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Miguel San Pedro, Esquire 825 Southeast Bayshore Drive Suite 1541 Miami, Florida 33131 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Daniel Y. Sumner General Counsel The Capitol, LL-26 Tallahassee, Florida 32399-3100
The Issue Whether Respondent, a licensed insurance agent, committed the offenses alleged in the Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is a licensing and regulatory agency of the State of Florida charged with the responsibility and duty to prosecute administrative complaints pursuant to the Florida Insurance Code. At all times pertinent to this proceeding, Respondent was licensed by Petitioner as a general lines insurance agent. On August 10, 1998, Petitioner obtained a Final Judgment against Respondent and Exotic Realty Corporation, d/b/a Exotic Insurance Agency, jointly and severally, in the principal sum of $235.81, accrued interest through August 7, 1998, in the amount of $145.56, and attorney's fees in the amount of $300.00, for a total sum of $681.37. The principal sum of $235.81 represented unearned commissions. This Final Judgment was entered in the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, in Civil Action No. 92-1766. The style of the proceeding was In Re: The Receivership of First Miami Insurance Company. In that proceeding, Petitioner was acting as the receiver for First Miami Insurance Company. A copy of the Final Judgment was served on Respondent on September 22, 1998. Petitioner advised Respondent in its transmittal letter that failure to timely pay the judgment would result in further action against Respondent's licensure. The Final Judgement has not been satisfied by Respondent or by Exotic Realty Corporation, d/b/a Exotic Insurance Agency.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of violating Section 631.155, Florida Statutes. It is further recommended that the final order suspend Respondent's licensure until the outstanding Final Judgment entered in Civil Action No. 92-1766 is satisfied by Respondent or by Exotic Realty Corporation, d/b/a Exotic Insurance Agency. DONE AND ENTERED this 27th day of October, 2000, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of October, 2000. COPIES FURNISHED: David W. Nam, Esquire Department of Insurance Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Jean Wallace 246 Northwest 58th Street Miami, Florida 33127-1622 Bill Nelson, State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue The issue in the case is whether Respondent received an insurance premium payment from a client and failed to remit it to the insurer in order to obtain insurance for the client, in violation of Sections 626.611(4), (5), (7), (8), (9), (10), and (13), 626.621(2) and (6), 626.9561, 626.9521, and 626.9541(1)(e)1. and (o)1.
Findings Of Fact At all material times, Respondent has been licensed as a Surplus Lines Agent, Life and Health (debit) Agent, Life Agent, Life and Health Agent, and General Lines Insurance Agent. On July 22, 1988, Charles M. Wilks visited the office of Respondent to purchase insurance on his automobile. Respondent quoted him a premium of $1257 for a one-year term commencing August 19, 1988. Mr. Wilks decided to purchase the insurance at the quoted premium. Accordingly, he gave Respondent a check in the amount of $1257 payable to Respondent's insurance agency. The same day, Respondent gave Mr. Wilks an agency receipt and Temporary Binder and Receipt effective from August 19, 1988, through August 19, 1989. The temporary binder showed the insurer as Dairyland Insurance Company. Respondent caused the check to be promptly cashed and credited to his agency's account. However, Mr. Wilks never received a policy. His wife called the agency every week after the policy did not arrive promptly. But she was unsuccessful in obtaining the policy despite promises by employees of the agency that they would mail the policy to the Wilkses. Upset because the automobile was no longer covered by insurance, Mr. Wilks visited Respondent at his office in November and demanded a policy. Respondent stated that Dairyland could not insure the type of car for which Mr. Wilks sought insurance because the car was a special customized model. In fact, Respondent had never submitted the application for insurance or the premium to Dairyland for issuance of a policy. Respondent convinced Mr. Wilks to purchase the insurance from a different company. Refunding one-half of the previously paid premium, Respondent issued Mr. Wilks a certificate of insurance that purportedly reflects coverage for the automobile from November 7, 1988, through November 7, 1989, from Clarindon National. Respondent again failed to submit the policy application to the insurer. When Mr. Wilks had still not obtained a policy by January, 1989, he went to Respondent's office, but learned that he had moved. After some effort, Mr. Wilks tracked down Respondent and demanded the return of the remaining premium payment that he had previously made. Respondent finally gave Mr. Wilks a check for the balance. Taking the check immediately to the bank, Mr. Wilks received payment on it. Dairyland was less fortunate with Respondent's checks. By letter dated October 19, 1988, the insurer informed Respondent that his authority to write insurance for the company was withdrawn effective December 12, 1988. As of February 14, 1990, the sum owed to Dairyland by Respondent's agency totalled $1049.43 in nonsufficient funds checks.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order revoking all of Respondent's above-described licenses. DONE and ORDERED this 29 day of March, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29 day of March, 1989. Copies to: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Nancy S. Isenberg, Attorney Division of Legal Services Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Anthony Brooks 500 E. Semoran Blvd., Suite 32 Casselberry , FL 32707
